CFSP in the News

This article explores planned large-scale infrastructure -- including high speed rail -- and stimulus spending in Thailand. Opponents of the program have called for fiscal prudence and have questioned the amount of public debt it would require. CFSP Faculty Director and MIT Professor Robert M. Townsend points out, however, that average debt-to-asset ratios are low and have been decreasing since 2006, a fact which suggests that concerns about spending are overstated.

Recent CFSP in the News

An editorial from The Guardian, UK, noted the contribution of Poor Economics authored by CFSP member Abhijit Banerjee and his co-author, Esther Duflo. The article notes the strength that the randomized trials performed by the J-PAL Poverty Action Lab will contribute to the ongoing evaluation of aid and other research devoted to development economics. They state, "As (the authors) admit, randomistas cannot answer some big questions – how to tackle food prices, for instance. But through lots of microstudies, they make a subtle case for one big argument: aid really can help poor people, provided the money follows the evidence."

CFSP members Robert M. Townsend and Tavneet Suri were highlighted in a recent news brief by Microcapital.org regarding the publishing of their most recent paper, Monetary Theory and Electronic Money: Reflections on the Kenyan Experience, co-authored with William Jack, Georgetown. The paper speaks to the ongoing potential of M-PESA, or mobile money, as well as how to address its implementation challenges.

The Federal Reserve Bank of Minneapolis published an extensive article highlighting the initial findings of CFSP Faculty Director Robert M. Townsend and co-authors Pierre-Andre Chiappori, Krislert Samphantharak, and Sam Schulhofer-Wohl in a working paper on risk sharing in Thai villages.

Author and Region editor Douglas Clement notes, “A number of households, the researchers indicate, might actually benefit from volatility in village income. A government program such as crop insurance could therefore have an adverse impact on some. ‘If aggregate risk were eliminated,’ write the researchers, ‘some relatively risk-tolerant households would suffer welfare losses.’”

The article summarizes the household behavior and circumstances that influence variability and risk sharing in Thai villages.

David Leonhardt of The New York Times and CFSP member Abhijit Banerjee and co-author Esther Duflo recently sat down to discuss their latest publication, Poor Economics. Leonhardt asked Banerjee and Duflo a series of questions ranging from the impact of education to recommendations for South Sudan, the world's newest country.

NPR's Tom Ashbrook recently hosted CFSP member Abhijit Banerjee and his co-author, economist Esther Duflo, in a discussion about the recent release of their new book Poor Economics. Banerjee and Duflo spoke about the ongoing and future relationship between population growth and poverty growth. Both authors stressed that aid effort has been "shooting blind" and could benefit from rigorous evaluation, with the same fervor adopted in business ventures. Failure to do so, might perpetuate what Duflo deemed "unacceptable" rates of poverty, a problem which she calls the "responsibility of humankind."

CFSP member Abhijit Banerjee and Esther Duflo, coauthor of Poor Economics, recently wrote a column for "Foreign Policy" exploring the idea of a nutrition-based poverty trap and examining purchasing choices of poor households. Both authors also challenge all-encompassing solutions and their disconnect with evidence: "All too many of them [experts] still promote sweeping, ideological solutions to problems that defy one-size-fits-all answers, arguing over foreign aid, for example, while the facts on the ground bear little resemblance to the fierce policy battles they wage."

William Easterly, professor of economics at New York University, recently reviewed the release of Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty, by CFSP member Abhijit Banerjee and Esther Duflo. Easterly highlighted the book's remarkable treatment of exposing what makes aid effective, noting the considerable lack of follow up to evaluate the effect of aid. Easterly praises the book, noting Banerjee and Duflo's care in examining the lives of their subjects. "I would give an edge to Mr. Banerjee and Ms. Duflo in this area—the sheer detail and warm sympathy on display reflects a true appreciation of the challenges their subjects face," writes Easterly.

David McKenzie recently reviewed the latest publication by CFSP member, Abhijit Banerjee, on the Development Impact blog. In his review, McKenzie offered praise for Banerjee and his coauthor, Esther Duflo, for integrating the latest and even unpublished research concerning development economics as well as highlighting micro evidence. McKenzie also includes anecdotes about a class he took at Yale with CFSP member Christopher Udry and research he carried out in Mexico and Sri Lanka was CFSP member Christopher Woodruff. McKenzie calls Poor Economics a "fascinating" read and deems their arguments "compelling."

Laura Starita, of Philanthropy Action, reviewed Poor Economics, by CFSP member Abhijit Banerjee and Esther Duflo. In her review, Starita explained that Banerjee and Duflo make a strong attempt at dispelling the idea that big problems, like global poverty, simply need "Big Ideas." The approach of Banerjee and Duflo, she argues, takes great care to examine the multifaceted and interwoven perpetuation of poverty, even challenging the idea that poverty traps are an all-encompassing explanation. Starita describes their holistic approach saying, "They are peeling the onion, not hacking it to pieces. Such meticulousness brings them to the eventual conclusion that framing the challenges of development through Big Ideas [...] generate Big Solutions that are cumbersome, expensive, top-down, and ultimately fail to consider the one critical success factor for any development initiative: the people."

CFSP member Tavneet Suri, along with William Jack of Georgetown University, wrote a column for Europe's VOX discussing the growing use of M-PESA, the mobile banking phenomenon spreading throughout the country of Kenya. The widespread use of M-PESA has been particularly interesting because of its ability to cut across socioeconomic boundaries, reaching rich and poor users alike. In fact, usage from rural households, typically less integrated into the wider financial economy, is growing at astonishing rates, doubling its numbers from 2008 to 2009. M-PESA is also showing promising effects on aiding households in facing economic security, particularly in the face of negative income shocks. Suri and Jack note what this growing popularity could mean for the changing landscape of Kenya's financial networks as well as anticipated policy and regulatory implications.